Tarun Chatterjee, J. - (1.) The following questions were referred to this court for our opinion under Section 256(2) of the Income-tax Act, 1961 (in short "the Act") : "1. Whether in view of the fact that the applicant as a tea broker is neither the purchaser nor the seller of tea and the sale proceeds of tea are not the applicant's trading receipts, the Tribunal was correct in holding that the sales tax collected by the applicant as a tea broker was its income and the amount of sales tax collected but remaining unpaid at the end of the year was disallowable under Section 43B of the Income-tax Act, 1961 ? 2. Whether, the Tribunal was justified in confirming the charging of interest under Section 216 of the Income-tax Act, 1961, amounting to Rs. 10,656 for the reasons stated in the order on conjecture and surmise not based on any material on record or were otherwise perverse ?"
(2.) The assessee who is the applicant before us is a private limited company, carrying on the business of tea broking and auctioneering. In the assessment year 1984-85, a sum of Rs. 1,45,759 being the sales tax collected by the assessee under the West Bengal Sales Tax Act but remaining unpaid at the end of the accounting year was disallowed and added back under Section 43B of the Income-tax Act. The case of the assessee was that it was neither a purchaser nor a seller of tea and the tea sale proceeds did not represent its trading receipts and, therefore, the sales tax collected could not be treated as a part of the trading receipts. It was further contended by the assessee that no entries in the profit and loss account were made debiting the sales tax nor was the same claimed in the return as deduction. In these facts and circumstances, the assessee contended that the disallowance under Section 43B was not proper. However, the contentions of the assessee were rejected and the amount was added. The order was confirmed by the Commissioner of Income-tax (Appeals). On further appeal it was pointed out that the decision of the Supreme Court in Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542 was rightly applied by the Department to the facts of this case. The contentions taken earlier were reiterated before the Tribunal. The Tribunal took the view that the aforesaid decision of the Supreme Court was clearly applicable to the assessee's case and the sales tax collected but remaining unpaid should be added back under Section 43B of the Income-tax Act. The Tribunal, however, directed that sales tax actually paid in the accounting year should be allowed as deduction as the Tribunal on that score relied on a decision of this court in the case of CIT v. Sri Jagannath Steel Corporation [1991] 191 ITR 676. From the records it appears that on September 12, 1983, the assessee filed an estimate of advance tax showing advance tax liabilities of Rs. 4,99,687 and paid the first two instalments accordingly. The estimate was however revised and the advance tax liability was shown at Rs. 7,99,500. However, the final instalment of advance tax was also paid. The Income-tax Officer was of the view that the assessee had underestimated the advance tax in the first two instalments and, therefore, levied interest of Rs. 10,656 under Section 216 of the Act. This levy was however confirmed by the Commissioner of Income-tax (Appeals). The matter was carried to the Tribunal. Before the Tribunal it was submitted that as the first estimate was filed on the basis of the facts prevailing at the material point of time and that there was no intention to underestimate the advance tax liability and on the basis of the revised estimate the advance tax was paid by the assessee, the levy of interest was not justified. The Tribunal held that the assessee had failed to show any specific circumstances for filing the lower estimate. It was further held by the Tribunal that the profits of the business in tea usually go high towards the close of the accounting year, which the assessee should have foreseen, and accordingly the order levying interest was upheld by the Tribunal.
(3.) Dr. Pal appearing on behalf of the assessee draws our attention to a decision of the Andhra Pradesh High Court in the case of CIT v. Devatha Chandraiah and Sons [1985] 154 ITR 893 and submitted that this decision of the Andhra Pradesh High Court had distinguished the Supreme Court decision in the case of Chowringhee Sales Bureau Put. Ltd. v. CIT [1973] 87 ITR 542, on which strong reliance was placed by the Tribunal as well as the authorities below and accordingly Dr. Pal pointed out that the amount received towards sales tax by the assessee from the purchaser was received on behalf of the actual owner of tea and therefore the same could not constitute a trading receipt. According to Dr. Pal the said amount which was paid periodically during the course of the year in question to the Government by way of sales tax and later on the assessment being completed, the turnover of the individuals whose turnover was less than Rs. 10,000 only, the amount of tax paid became refundable, in fact was refunded to the assessee. Therefore, according to Dr. Pal initially the amount of sales tax received by the assessee cannot bear the insignia of income or trading receipt so as to be assessable to income-tax. Dr. Pal has also drawn our attention to a decision of the Supreme Court in the case of CIT v. D. Shankaraiah [2001] 247 ITR 798, in which the judgment of the Andhra Pradesh High Court in the case of CIT v. Devatha Chandraiah and Sons [1985] 154 ITR 893, has been duly confirmed. That being the position relying on the aforesaid two decisions, one of the Supreme Court and of the Andhra Pradesh High Court, Dr. Pal contended that the sales tax collected could not be treated as a trading receipt in the case of the appellant unlike the facts of the Chowringhee Sales Bureau Pvt. Ltd. v. CIT.;